J.P. Morgan Materially Reduces Intraday Credit Exposure to Achieve Tri-Party Repo Market Reforms

New York - 28 April 2014

Changes to Meet Target End State of Reforms Make System Safer and More Efficient 

J.P. Morgan today announced that it has achieved the reduction of Tri-Party credit set forth in the target end state of U.S. Tri-Party Repo Market Reforms. J.P. Morgan is the first clearing bank to successfully eliminate the unwind as part of the reforms proposed by a New York Fed-sponsored, industry-wide working group, which focused on reducing systemic risk and improving operational efficiency for market participants.

In November 2013, J.P. Morgan introduced three final interlinked initiatives: rolling settlement, simultaneous exchange of cash and collateral, and the creation of a new secured committed clearance advance facility. As of today, J.P. Morgan has successfully transitioned all clients to the new model.

“Together with our clients, we’ve completed a multi-year journey that delivers greater transparency, removes uncapped intraday credit, introduces a capped committed credit facility, and gives dealers and their lenders innovative tools that increase their operational efficiency,” notes Michael Albanese, head of U.S. tri-party repo clearing and collateral management at J.P. Morgan. “Step by step, every new piece of functionality introduced over the last four years has allowed us to reduce materially the systemic risk previously created by overreliance on clearing bank credit.”

Mark Trivedi, J.P. Morgan’s head of collateral management product and a member of the tri-party working group sponsored by the New York Federal Reserve Bank, said: “From the beginning, the working group’s first and most significant recommendation was to achieve the practical elimination of intraday credit. With that now achieved, J.P. Morgan will continue to invest in its tri-party repo platform as part of our complete collateral portfolio solutions. One of our key priorities is to continue working closely with market partners on the final steps of further credit reduction for General Collateral Finance repo.”     

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